More announcements supporting business through COVID-19
The Government has announced a new suite of measures to provide additional relief for small and medium-sized businesses during the COVID-19 pandemic. At this stage there isn’t a lot of detail available. We will update you as this is released.
The new measures include:
- Greater flexibility for taxpayers in respect of statutory tax deadlines;
- $3.1 billion tax loss carry-back scheme (estimated cost over the next two years);
- $60 million estimated annual savings to business each year from changes to the tax loss continuity rules;
- Measures to support commercial tenants and landlords;
- $25 million in the next 12 months for further business consultancy support
Greater Flexibility for business taxpayers in respect of statutory tax deadlines
An amendment will introduce a discretionary power into the Tax Administration Act 1994 to allow Inland Revenue to provide an extension to due dates and timeframes.
This could include, for example, extending deadlines for filing tax returns and paying provisional and terminal tax. At this stage, the power will be time-limited for a period of 18 months and will apply to businesses affected by COVID-19.
Tax loss carry-back scheme
From our perspective this is the most interesting of the announcements.
The proposed mechanism is designed to provide cash to businesses, in the form of a tax refund, for those businesses that are, or anticipate being in, a loss position. It is proposed that the scheme will enable a business to offset a loss in a particular tax year against a profit in a previous year, and receive a refund of the tax paid in the previous profitable year.
IRD will be undertaking targeted consultation with tax advisors (including Greenlion through CAANZ) to make the law and administrative guidance as clear as possible. It is anticipated that the bill introduced in the week of the 27th of April.
Changes to the tax loss continuity rules
The government has recognised that in this extraordinary time, businesses may need to raise additional capital to remain afloat. In principle the announcement means if an investor were to take more than 51% of the company, losses would be rolled forward and be available to be utilised by the newly capitalised business. Previously these losses would have been forfeited.
The new rules will apply for the 2020-21 and later income years and will be included in a bill in the second half of 2020.
Measures to support commercial tenants
The government plans to extend the timeframes required before landlords can cancel
leases and mortgagees can exercise their rights to sale or repossession.
These changes would still allow landlords to cancel leases and mortgagees to exercise their powers during the period that an epidemic notice is in force, but would allow for more time for breaches or defaults to be remedied.
Further business consultancy support
Businesses will be able to access free, tailored specialist support for a range of issues they may be currently facing, including business continuity planning, finance and cash flow management, HR and staffing issues, and potentially any sector-specific issues.
The Regional Business Partner Network will scale up their existing advisory services so that more businesses can receive support over the next 12 months.
Existing helplines often used by business – those operated by the Employers and Manufacturers Association and the Canterbury Chamber of Employment and Commerce – will also be extended.
Greenlion has made an application to be an approved partner to ensure our clients can access the support available.
Should you need any further information or have any queries regarding this, please do get in touch.
Stay happy, healthy and safe out there.